Evergreen Pacific Partners Management Company Inc

FEES AND COMPENSATION

       The following is a general description of fees, compensation and expenses of the
Partnerships. Differences exist from Partnership to Partnership, and certain Partnerships may not
charge certain fees, compensation or expenses that other Partnerships charge. The Partnership
Agreements of the Partnerships describe fees, compensation and expenses in greater detail.

         In general, the General Partners receive a Management Fee (as defined below) and a carried
interest in connection with advisory services. The General Partners or other EPP entities or
affiliates receive additional compensation in connection with management and other services
performed for portfolio companies (e.g., monitoring and other fees) of Partnerships and a portion
of such additional compensation will offset in part the Management Fees otherwise payable to the
applicable General Partner. Investors in the Partnerships also bear certain expenses. A summary
of each Partnership’s fees and expenses follows, but investors should review the applicable
Partnership’s Partnership Agreement for details regarding that Partnership’s fee structure and
expenses. Terms not defined herein are defined in the applicable Partnership Agreement.

Management Fee

         Each Partnership generally pays the applicable General Partner a management fee (the
“Management Fee”) equal to 2% on an annual basis of aggregate Partnership investor capital
commitments (“Commitments”). The Management Fee is paid based on semi-annual periods
payable partially in arrears and partially in advance. A portion of the Management Fees is
ultimately received by the Management Company. Investors participating in a closing after the
initial closing of a Partnership bear the Management Fee from the date of the initial closing of such
Partnership, plus applicable interest. The Management Fee may be reduced upon the expiration of
the investment period or earlier upon the occurrence of certain other events as described in the
applicable Partnership’s limited Partnership Agreement. The Management Fee will be payable
until all portfolio investments are distributed or until the General Partner’s relationship with the
applicable Partnership is terminated for other reasons (as described in the Partnership Agreement).
Installments of the Management Fee payable for any period other than a full six-month period are
adjusted on pro rata basis according to the actual number of days in such period.

        The Management Fee is reduced by a portion of the directors’ fees, transaction fees,
breakup fees and certain other fees paid by portfolio companies to a General Partner, the
Management Company or certain of their affiliates (such fees, “Supplemental Fees”). To the
extent that such an offset credit would reduce the Management Fee for a given period below zero,
the credit will be carried forward for future application against payable Management Fees. To the
extent any such excess remains unapplied upon dissolution of a Partnership, each partner of such
Partnership will receive its share of such unapplied excess, unless such partner elects not to receive
its share. To the extent that any other Fund or any other entity or individual co-invests alongside
the Partnership in any portfolio company investment, any Supplemental Fees will be allocated pro
rata among the Partnership and the co-investors in proportion to the cost of the investment in the
portfolio company borne by each.

         EPP and/or its affiliates generally have discretion over whether to charge transaction fees
or certain other fees to a portfolio company and, if so, the fee rate or amount. The receipt of such
fees generally will give rise to potential conflicts of interest between the Funds, on the one hand,
and EPP and/or its affiliates, on the other hand. Portfolio company-related fees may include
amounts prepaid in anticipation of future services, which may be offset against the applicable
Management Fee as set forth in the relevant Partnership Agreement. Although such prepaid fees
generally will be based on the anticipated level and duration of services that EPP and/or its
affiliates believe at the time of such prepayment are likely to be provided to the portfolio company,
over time, they may be greater or less than the amount that is ultimately incurred with respect to
services ultimately provided to such portfolio company.

         Certain Partnership Agreements permit the General Partner to waive or reduce a portion of
the Management Fee in exchange for a reduction in the General Partner’s capital contribution
obligation and/or a corresponding interest in Partnership profits. The limited partners of the
Partnership (the “Limited Partners”) may be required to make a pro rata contribution according
to their respective Commitments to fund any contribution that would otherwise be required of the
General Partner in connection with any such waiver or reduction as described above and, as a
result, the exercise of such waiver or reduction may result in an acceleration (or delay) of investor
capital contributions. Waived or reduced Management Fees are not subject to the Management

Fee offsets described above, and the amount of such waived or reduced Management Fees has the
potential to be significant.

Carried Interest

        The General Partner of each Partnership will receive a carried interest with respect to such
Partnership equal to 20% of all realized profits subject to an 8% compound preferred return and
related General Partner catch-up provision, as more fully described in the Partnership Agreement
of the applicable Partnership. The carried interest distributed to the General Partner is subject to a
potential giveback at the end of the life of the Partnership if the General Partner has received excess
cumulative distributions.

Other Information

         The Advisers are permitted to exempt certain investors in a Partnership from payment of
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TYPES OF CLIENTS

        The Advisers provide investment advice to the Partnerships. The Partnerships are
investment partnerships or other investment entities formed under domestic or foreign laws and
operated as exempt investment pools under the Investment Company Act of 1940, as amended (the
“Investment Company Act”). The investors participating in the Partnerships may include
individuals, banks or thrift institutions, other investment entities, pension and profit-sharing plans,
trusts, estates or charitable organizations or other corporations or business entities and may
include, directly or indirectly, Principals or other employees of the Advisers and their affiliates
and members of their families, or other service providers retained by the Advisers.

        Fund I and Fund II have minimum investments of $1 million and $5 million, respectively,
for third-party investors, which may be waived by the applicable General Partner. Generally,
investors must be “accredited investors” as defined under Regulation D of the Securities Act of
1933, as amended, and may also be required to be either “qualified purchasers” or “knowledgeable
employees” as defined under the Investment Company Act of 1940, as amended. The General
Partners may waive such minimum investment amounts and qualification requirements.

    METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

General

        The principal investment strategy of the Advisers is to achieve superior risk-adjusted
returns, primarily by acquiring equity and equity-related securities and debt in private growth
oriented companies. The Advisers generally focus on middle market buyouts and growth equity
investments in companies principally located in Western North America with annual revenues
typically between $50 million and $350 million. The Advisers intend to make investments in
portfolio companies operating primarily in traditional industry segments including:
(i) manufacturing and distribution; (ii) packaging; (iii) media (radio and cable); and (iv) consumer.
Investments are predominantly in non-public companies although investments in public companies
are permitted.

       There can be no assurance that the Advisers will achieve the investment objectives of the
Partnerships, and a loss of investment may be possible.

Investment and Operating Strategy

       The following is a summary of the investment strategies and methods of analysis generally
employed by the Advisers on behalf of the Partnerships. More detailed descriptions of the
Partnerships’ investment strategies and methods of analysis are included in the applicable
Partnership Agreement and private placement memorandum for each Partnership. There can be no
assurance that the Advisers will achieve the investment objectives of the Partnerships and a loss
of investment is possible.

        The Advisers intend to continue a regimented investment process, developed and refined
during the Principals’ investing and operating experience. The Advisers’ investment process
consists of:

       •   Direct transaction origination leading to investments in quality companies.

       •   Disciplined execution focused on identifying and mitigating risks, developing
           appropriate capital structures and synthesizing all information to document and make
           investment decisions.

       •   Operational improvements at portfolio companies in partnership with management to
           generate cash flow growth.

       •   Exiting from investments at an appropriate time based on company performance and
           market timing through sales to either financial or strategic buyers.

        Direct Transaction Origination. Applying the filters of geography, size and industry
associated with the Advisers’ investment strategy allows the Principals to focus their origination
efforts on the approximately 5,000 companies resident in the Advisers’ target markets. The
Advisers believe this focus allows the Principals to execute a direct origination strategy,
coordinating efforts on a select group of target companies to acquire businesses with less
competition and at attractive valuations. The Advisers focus on long-term relationships with
business owners and leaders in the target market, positioning the Advisers to seek transactions on
a direct basis.

        Disciplined Execution. After a transaction has been originated, the Principals launch a
disciplined execution process consisting generally of the following:

       •   Negotiation of a non-binding letter of intent detailing key transaction terms and
           granting the Advisers exclusivity for a period of time.

       •   Examination of all aspects of the target company including:

           •   Detailed forensic accounting due diligence to determine quality of earnings
               generally supported by a “big four” accounting firm.

           •   Detailed business due diligence supported by industry leading consultants.

       •   Creation of an appropriate capital structure using senior, mezzanine and seller
           financing and equity.

       •   Finalization of the investment decision.

       •   Finalization of the capital structure and purchase documents and closing.

       Operational Improvements and Cash Flow Growth. The Advisers partner with
management to seek to drive cash flow growth at the acquired portfolio company. Typically, the
process consists of the following key components:

       •   Augmenting management.

       •   Partnering with management to finalize strategy.

       •   Optimizing performance by executing against key business drivers.

       •   Providing capital to facilitate growth.

        Exit. The Advisers seek to invest in target portfolio companies with a defined path to
liquidity. The Advisers’ exit process typically involves:

       •   Holding investments for four to seven years.

       •   Monitoring M&A activity in industry.
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